For Mortgage Borrowers, Shopping Around Pays Off

An analysis released Thursday by Zillow found that the majority of U.S. home shoppers are costing themselves thousands of dollars by not submitting multiple mortgage applications.

The report explained that for a typical home valued at $360,000, a buyer using a 30-year fixed-rate mortgage at the current average of 6.24% would pay about $2,345 per month.  That figure includes principal, interest, taxes, insurance and maintenance costs, and it assumes the borrower made a 20% down payment.

But someone who obtained a mortgage rate of 5.74% — 50 basis points lower and “within the typical range for shoppers who compare multiple offers,” according to Zillow — would pay $2,253 per month and save $1,104 per year. Compared to a borrower with a 6.74% rate, the annual savings amounts to $2,244.

“Buyers often spend months finding the right home, but only minutes comparing lenders,” Karg Ng, senior economist for Zillow Home Loans, said in a statement. “Even a small difference in rate can meaningfully shrink a mortgage payment and expand the number of homes within reach.

“Affordability is tough enough today that buyers shouldn’t overlook any potential savings.”

Zillow went on to note that based on November data, the ability to save $1,100 per month would have made an additional 22,000 U.S. homes affordable to a median-income household. The company considered a home affordable if payments didn’t exceed 30% of their monthly income.

Many of these homes are located in Sun Belt hot spots where prices rose sharply after the COVID-19 pandemic, led by Dallas, Atlanta, Houston, Miami and Phoenix.

Potential savings also varied by location and reached as high as $4,750 per year in San Jose, based on the difference between rates of 5.74% and 6.24%. In San Francisco, Los Angeles, San Diego, Seattle, Boston and New York City, the annual savings topped $2,000.

But a separate report released last month by Zillow showed that only 30% of consumers submit more than one mortgage application.

The differences can be stark when shopping around. A 2019 analysis from Zillow found gaps of 90 to 130 basis points “between the best and worst quotes for borrowers, depending on their credit profile.” The typical gap was 50 bps in 2022, according to a similar Freddie Mac study, which noted sharp gains that year compared to the long-term average  of 20 bps.

Factors beyond the rate

October data from the Mortgage Bankers Association showed that mortgage payments have slowly come down in 2025. The median monthly payment of $2,039 represented a fifth straight month of declines and was $88 lower than one year earlier.

But other costs, like credit reports, are on the rise.

HousingWire recently reported that costs for FICO scores through the major credit bureaus — Equifax, Experian and TransUnion — are expected to increase by 50% in 2026. Resellers are not yet offering a less expensive alternative through FICO, and the new VantageScore 4.0 option has yet to become integrated with Fannie Mae and Freddie Mac lending processes.

These ongoing price increases have prompted some lenders to charge upfront for credit pulls rather than at closing as they attempt to lower expenses borne by clients.

Brendan McKay, owner of Maryland-based McKay Mortgage and chief advocacy officer for the Broker Action Coalition, offered some context around credit report costs on social media.

“There is no official government study that provides an exact number of times the average borrower has their credit checked. However, examining large-scale research from the Harvard Joint Center for Housing Studies and the New York Fed, it’s reasonable to conclude that consumers typically have their credit checked around three times during a home-buying attempt,” McKay wrote this week.

“Much of the conversation around soaring credit report costs focuses on the sticker price, which makes sense. However, that is not the only way to decrease costs. If you reduce the number of times a borrower’s credit is pulled from three to one, the effect is the same as taking a $130 credit report and reducing the cost to $43 in practice without changing the underlying price at all.”